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Commentary

By Paul Kennedy(@pkedit)Jake Edwards just completed his second season as the president of the USL. The
league expanded from 14 teams in 2014 to 24 in 2015 and 29 in 2016. It will have 31 teams in 2017 and more teams could be on the way in the future.

It made news with the phenomenal success of
expansion FC Cincinnati, which shattered all league attendance records, but has raised the bar across the board with its application for Division II status, the same that the NASL currently holds. It
has triggered a mini-stadium construction boom with clubs working to meet new minimum stadium requirements for 2017.

U.S. Soccer Division II application. Edwards expects U.S.
Soccer's pro committee to make its recommendations to the board of directors, which should take up the USL application at its Dec. 6 meeting. "The vast majority meets or exceeds the requirements,"
said Edwards.

The big area clubs must work on is getting their stadium capacities up to 5,000. "As a league," Edwards said, "we're giving them a deadline of next season." That means clubs
must present business plans detailing contractors and vendors, seat plans, timelines and costs.

This stadium requirement mostly affects the MLS clubs operating second teams locally. The
Portland Timbers will move T2 from the University of Portland to Providence Park. Others, like Vancouver, Montreal and Toronto FC, will expand the facilities at which their second teams play, while
the New York Red Bulls will move to Montclair State University, where the stadium will be expanded to 5,000 seats.

"Everyone has to meet the standards," Edwards said, "whether they are an
independent team or MLS second team, whether they have been in the league one year or 20 years."

Expansion. The NASL's Tampa Bay Rowdies and Ottawa Fury are last-minute additions
for 2017, along with Reno 1868 FC, whose team will be stocked with players from the San Jose Earthquakes in a manner similar to the Rio Grande Valley FC Toros' relationship with the Houston Dynamo.
Nashville will join in 2018.

Edwards said it was "late in the game" for additional NASL teams to join. "We are set for 2017 with three great clubs coming in," he said. "I don't foresee
any more clubs coming in."

The three new teams will give the USL 31 for 2017 -- Wilmington has dropped down to the PDL -- and Nashville will make 32 for 2018. Edwards expects additional
expansion in future years though the bar will be higher: all teams must have soccer-specific stadiums with a capacity of 8,000-10,000, which may move the timeline when clubs join the league back a few
years.

MLS relationship. MLS will had 12 teams in the USL in 2017 -- 10 second teams and two joint ventures (Rio Grande Valley and Reno). "We don't anticipate a big wave going
forward," Edwards said. "There will be no additional teams in 2017. In 2018, you may see one or two."

The kind of relationship that Rio Grande Valley and Reno have -- independently owned
and operated on the business side but stocked on the technical side (players, coaches, staff) by the MLS club -- is something there could be more of in the future. "That's a model that appeals to some
of the independent investors approaching us to join," Edwards said, "and certainly appeals to some of the MLS clubs when you can get the best of both worlds." He confirmed interest in Boise coming in
the league and taking over Portland's T2, pointing to the soccer ties the Timbers already have to Boise.

MLS clubs still have the option of affiliating with a USL team, sending a few
players on loan. The investment in a USL second team is considerable -- a minimum of $1 million -- though there's pressure for MLS clubs to use their USL team to fast-track the progress of academy
players -- and get them locked into pro contracts before a foreign club steps in and signs them.

Clubs are moving academy players -- high school players -- to their USL teams -- where
they maintain their NCAA eligibility, at least until they enter college -- and turning around and then signing them to pro contracts. Auston Trusty went from a Philadelphia academy player to a
Bethlehem Steel starter and then on to the Union's game-day roster within the space of six months. The champion New York Red Bulls II started 17-year-old Kevin O'Toole, a rising high school
senior and Princeton commit, on its 2016 USL championship team.

"There's the risk of losing the players and having them poached by clubs overseas," Edwards said. "You want to get them
involved at the professional level as soon as possible."

FC Cincinnati. The expansion team shattered all USL records with an average attendance of 17,296 during the regular season
and a crowd of 30,187 for its playoff game at Nippert Stadium.

Edwards said Cincy's success was "nothing short of incredible" and an inspiration for other USL clubs to see what is
possible. He admitted it was a bit of an anomaly and credited several factors for the clubs' success, beginning with timing. The Cincinnati Comets -- with 16-year-old Ringo Cantillo --
dominated the ASL in the early 1970s and the indoor Cincinnati Kids -- co-owned by Pete Rose -- were an original member of the MISL in the late 1970s. Cincinnati had no pro soccer in recent
years but there was pent-up demand, which FC Cincinnati met at just the right moment.

Edwards credits owner Carl Lindner III for getting everything right. "Carl is a humble
and classy individual," he said. "He wants to have a very high-performing club and wants to do it in the right way and sensible way."Lindner invested heavily in the business side -- ticket
sales, operations, corporate partnerships -- and it paid off. "Thirty-thousand fans don't come to a game by accident," Edwards added. New owners. As the USL pushes forward and
raises the bar in terms of stadium requirements, the pressure to attract new owners grows as current owners max out their commitment (financial or otherwise) to their clubs. Four clubs changed
majority owners in 2016: Rochester and Charleston, both longstanding members of the USL, and Orange County and Arizona United, which were the first wave of expansion into the West. Edwards said there
might be one or two more ownership changes in the near future.

"What it says is that there is a constant drive to attract quality owners into the league," Edwards said. "We need
these groups to grow their clubs and the league." At the same time, he said, departing owners must feel good about their investment. "We want to help owners walk away feeling like they have enjoyed
the ride, built something, done something important for their community."

They have not found a viable path forward for a stadium. Their owners have stated that nothing will happen until this happens. Don't believe there is much, if any, political support either. I personally believe that their fans will eventually give up and throw their lot in with MLS San Antonio efforts.

US Soccer shouldn't consider any changes to lower division status until MLS caps the number of teams. How can there be stability at the lower levels if there isnt any at the highest levels? Otherwise it's just manipulation by MLS to make the numbers look good.

The longer MLS holds out a bait of inclusion to outside/new teams, the longer there will be turnover in those divisions beneath. So MLS is enabling instability in the leagues below--essentially manipulation. If Sunil had a spine, which he does not, he would not allow Garber to monopolize the second division as he has the first. Maybe, 5 years after MLS caps the number of teams, there should be a reevaluation of this issue, but why now?

MLS will never cap team expansion, its their only way to pay down losses every year or 2 as this is a bubble. MLS will have 40 teams by 2030 and the last 12 will pay $300-500m each to get in. That gives each team a $10m check every year while they all scramble to not bleed as much as they do in ops. Half will have USL teams & the other half will split them so thats $500k-1m + annual ops of $2m (players, coaches, management, marketing, stadium fees, etc..) MLS teams burn $10m on players salaries, $5m on coaching, 3m on USL/Youth Academy, 5m on stadium ops, 3m management, 2m on marketing, 2m on admin/ops. Thats $30m a year. they don't bring in $30m a team! expansion gives them $10m, Rights 3m, Attendance/concessions/fees $4m, local sponsors/marketing deals $3m, MLS Sponsors $5m, MLS/SUM funny money $5m that is the only way they break even.